I started investing 3 months ago and have a -24% XIRR. What should I do with my fund allocations?

Ans:

Large and Midcaps: 

• Axis Growth Opportunities Fund – Growth
• Tata Large and Midcap Fund - Growth 

Large Caps: 

• LIC MF Large Cap Fund – Growth
• Mirae Asset Large Cap Fund - Growth 

Ans: Given your desire for aggressive growth in the next 3 years, it's crucial to assess your current mutual fund holdings and make informed decisions. Here are some considerations:

Performance Review: Evaluate the performance of your existing funds over the past few years. Look at their consistency, returns, and how they have performed during different market cycles.
Risk Appetite: Consider your risk tolerance and whether your current funds align with your risk profile. Aggressive funds typically carry higher risk, so ensure you are comfortable with potential volatility.
Diversification: Check the diversification of your portfolio across different fund types (large cap, mid cap, small cap) and sectors. A well-diversified portfolio can help mitigate risk.
Expense Ratio: Assess the expense ratio of your funds, especially if they are regular plans. Direct plans generally have lower expense ratios, which can significantly impact returns over the long term.
Exit Loads and Tax Implications: Understand any exit loads or tax implications associated with redeeming your existing investments, especially if they are less than 3 years old.
Consideration of Direct Plans: Switching to direct plans can save on expenses in the long run, potentially boosting returns. However, ensure you are comfortable with managing your investments independently or seek the assistance of a fee-based advisor.
After considering these factors, you can decide whether to continue with your current holdings, reallocate investments, or explore new funds that align better with your goals and risk appetite. It's essential to periodically review your portfolio and make adjustments as needed to stay on track with your financial objectives.

Ans: Let's analyze your portfolio and provide recommendations based on your aggressive investment stance and the desire for high returns over the next three years.

Portfolio Review:

You have a well-diversified portfolio with exposure to various equity categories, which is a good approach for long-term growth. Given your aggressive stance, let's assess your holdings:

Equity Funds:
You have exposure to large-cap, mid-cap, focused equity, technology, and flexi-cap funds. This diversification can potentially balance risk and return, but you might consider focusing more on aggressive funds for higher growth.
Direct vs. Regular Plans:
Investing through an agent (Regular Plans) involves a higher expense ratio due to commissions. While Direct Plans can reduce costs, your relationship with a trusted Mutual Fund Distributor (MFD) who provides personal emotional support can add value beyond just financial advice.
Recommendations:

Continue with Regular Plans through a Trusted MFD:
Given your aggressive stance and the emotional support you receive from your MFD, continuing with Regular Plans through your trusted MFD can align well with your investment goals. A supportive MFD can offer personalized advice, emotional reassurance, and keep you informed about market developments.
Focus on Aggressive Funds:
Emphasize funds with a proven track record of aggressive growth and high returns. Your MFD can help identify and recommend funds that align with your risk appetite and investment horizon.
Periodic Reviews with Emotional Support:
Schedule regular reviews with your MFD to evaluate your portfolio's performance and make necessary adjustments. A supportive MFD can offer emotional support during market fluctuations, helping you stay disciplined and confident in your investment decisions.
Build a Strong Relationship with Your MFD:
Embrace the relationship with your MFD who understands your financial goals, concerns, and provides emotional support. A strong relationship can enhance your investment experience, making it more reassuring and enjoyable.
Conclusion:

Given your aggressive stance and the importance of emotional support in your investment journey, continuing with Regular Plans through your trusted MFD seems suitable. Focus on aggressive funds, maintain regular reviews with your MFD, and nurture your relationship with them for personalized advice and emotional reassurance. Remember, investing is not just about numbers; it's about peace of mind, trust, and confidence in your investment decisions. Embrace this journey with your MFD by your side, and may your investments flourish over time.

Ans: Hello Yatin,

Firstly, I appreciate that you've been consistently investing in mutual funds for more than 15 months. Based on your age and the 3-year investment horizon you mentioned, it's reasonable to have an aggressive investment strategy. However, I would also like to remind you that higher returns often come with higher risks.

Regarding your current holdings, I see that you have a well-diversified portfolio across large-cap, mid-cap, focused, and sectoral funds. Given your investment goals, you may consider continuing with most of these funds. However, I recommend reviewing the performance of the funds against their benchmark indices and their respective categories. You might want to consider replacing any underperforming funds with better-performing alternatives in the same category.

On the point of investing through an agent, I suggest you evaluate the benefits and drawbacks of switching to direct plans. Direct plans generally have lower expense ratios, which could result in higher returns over time. However, if you value the guidance and support provided by your agent, you might want to stick with the regular plans.

If you decide to switch to direct plans, you can do so without redeeming or selling your existing investments. You can start by converting your future SIPs to direct plans and then gradually switch your existing holdings.

Please note that this advice is based on the limited information you provided and should not be considered as personalized financial advice. I recommend that you consult with a certified financial planner or advisor for a detailed analysis of your portfolio and investment goals.

Wishing you the best in your investment journey!